Ogilvy & Mather Worldwide

Published on September 15, 2003.

Opened in New York as Hewitt, Ogilvy, Benson & Mather, 1948; went public, 1966; acquired in a hostile takeover by WPP Group, 1989.

Ogilvy & Mather Worldwide traces its beginnings to the 1948 establishment of Hewitt, Ogilvy, Benson & Mather in New York by Anderson Hewitt and David Ogilvy. Business was slow until February 1949, when Mr. Hewitt brought in the first big account, Sun Oil. In 1951, the agency was asked to create ads for C.F. Hathaway Co., a small shirtmaker from Waterville, Maine, for which Mr. Ogilvy created "the man in the Hathaway shirt" campaign.

About a year later, Ogilvy took on another account that also promised scant spending: Schweppes Co., a U.K.-based marketer of tonic water and other mixers, which had the notion of using its ad manager, Commander Edward Whitehead, in its ads. The distinguished-looking Mr. Whitehead exuded poise and well-tempered elegance, and what began as a single introductory ad grew into a TV campaign that continued into the 1960s.

"Carriage-trade" image

The product personalities created for these two small clients had a tone about them that called for a refined environment in which to be seen. Mr. Ogilvy placed the ads in The New Yorker, whose influential, sophisticated audience quickly became aware of the agency as well as the creator of the ads. Mr. Ogilvy developed a "12-point creative credo" and blanketed new-business prospects with his ideas. Late in 1952, the agency picked up $6 million in Rinso business from Lever Brothers, its first package-goods account.

Mr. Hewitt, however, took a dim view of the agency's carriage-trade image as well as the British upper-class tone of some of his partner's pet accounts. The two clashed repeatedly, and in February 1953, Mr. Ogilvy resigned. The agency's backers, however, supported Mr. Ogilvy, and in September 1954, the agency, in new offices, was renamed Ogilvy, Benson & Mather.

But without the marketing savvy of Mr. Hewitt—who left the agency with the Sun Oil and Chase Bank accounts, as well as several key account people—the shop faced serious problems. Left to its own devices, the agency lost Franco-American and Rinso soon after, though Lever offered Dove soap, for which the agency wrote the well-remembered tagline "with 1/4 moisturizing cream."

By 1957, Ogilvy's bread-and-butter clients included Maxwell House coffee, Dove soap, Good Luck margarine and Pepperidge Farm, and in December of that year, Rolls-Royce also gave its account to Ogilvy.

For Rolls-Royce, Mr. Ogilvy in 1958 wrote what became one of his best-known headlines: "At 60 miles an hour the loudest noise in this new Rolls-Royce comes from the electric clock." (It was in fact lifted from an article in a British auto magazine, which Mr. Ogilvy credited.) The copy that followed enumerated 11 engineering advantages of the Rolls-Royce.

In 1960, the agency hired Jock Elliott away from BBDO to manage the Shell Oil account, its largest. To accommodate Shell, Ogilvy adopted a negotiated annual fee based on a cost-plus formula rather than the traditional 15% commission system it had used before.

In 1962, American Express moved its account to the agency (on a fee basis, reportedly valued at $1.4 million). In 1975, it launched the "Do You Know Me?" campaign for American Express credit cards, in which a procession of presenters with famous names but not necessarily famous faces asked viewers that question. In a later effort for American Express Traveler's Checks, Ogilvy introduced actor Karl Malden as brand spokesman with his "Don't leave home without them" warning as tagline.

Going public

In 1964, Ogilvy's billings were approaching $80 billion, with mass merchandisers such as Sears, Roebuck & Co. helping to balance the agency's carriage-trade accounts. In November of that year, the American agency merged with its London-based partner, Mather & Crowther, to form a single operating company known as Ogilvy & Mather.

In December 1965, Mr. Ogilvy dropped his title of chairman to become creative director and Mr. Stowell gave up the presidency. Mr. Elliott became chairman, and in January 1966 all the agency's offices officially adopted the name Ogilvy & Mather; Ogilvy & Mather International was formed as the parent, with Mr. Ogilvy as chairman.

In April 1966, the agency made its initial public offering, which stimulated the agency's appetite for international expansion. Two years later, Paris-based Publicis and Ogilvy exchanged a small amount of stock. The following year, Ogilvy began buying up agencies in Venezuela, Colombia, Brazil and Argentina. In July 1971, it bought S.H. Benson Ltd., one of its original backers in 1948.

In December 1970, it acquired Carson/Roberts, the largest agency on the West Coast, and in 1976 picked up creative powerhouse Scali, McCabe, Sloves. In 1975, Ogilvy opened an office in Chicago, which became a $40 million shop almost overnight, largely on the basis of its Sears business. Ogilvy acquired Cone & Weber, Seattle, in 1977.

Finally in 1979, with huge cash reserves and a reputation for being the best-managed agency in the business, Ogilvy & Mather began to look at J. Walter Thompson Co. Each agency was strong where the other was not, and there were minimal client conflicts and many clients in common, but Ogilvy's board eventually declined the merger.

Mr. Ogilvy retired as chairman of the holding company in 1975 and Mr. Elliott succeeded him. In 1982, Ogilvy acquired an equity stake in South Africa-based Rightford, Searle-Tripp & Makin, which was renamed Ogilvy & Mather Rightford, which handled the Volkswagen account in South Africa.

By 1985, with billings of $2.4 billion, Ogilvy & Mather International became Ogilvy Group, overseeing conglomerate in which advertising accounted for only 62% of revenue.

In May 1989, Martin Sorrell's WPP Group acquired Ogilvy Group, despite some impassioned rhetoric from the retired Mr. Ogilvy, who accepted the title of WPP honorary chairman. Charlotte Beers, became the first Ogilvy CEO recruited directly from another agency (Tatham, Laird & Kudner) and brought a healthier Ogilvy into being along with a fresh phrase in the agency lexicon: brand stewardship. In 1996, the pendulum swung back to homegrown leadership with the appointment of Shelly Lazarus as CEO.

For 2001, Ogilvy & Mather Worldwide had worldwide gross income of $1.14 billion, up 3.8% over 2000, on billings of $10.68 billion, up 1.8% from the year earlier.

Ogilvy & Mather weathered the recession better than most, opting to stay out of new business for the most part and focus on its major client relationships, such as IBM and American Express. However its work on the Office of National Drug Control Policy ran into trouble over accusations that the agency had overbilled its client. The agency settled, though several, now former, executives were to go on trial in September 2004 for their role in the scandal.

For 2003, the agency had U.S. revenue of $235.6 million, up 17.7% from the year-ago period, with worldwide revenue of $706.3 million, up 19.8% from 2002.